How a Business Valuation Can Help Your Business

Apr 24, 2020

Have you considered selling a Southwest Florida company? Do you know how much it is worth? Selling a business you own is a huge financial decision. In order to make that decision, you need to make sure you have an accurate idea of what your business is worth. It can help you determine if selling is the best action to take and also help you choose decide on a reasonable asking price. Professional business valuations provide several other benefits as well, even if you’re not quite ready to sell.

Private companies can benefit from a certified business valuation since they cannot be traded on a public exchange. A valuation can provide an owner or stakeholders with a reliable estimate of the company’s value. It also takes into consideration unique factors about a business and its industry, such as intellectual property. A certified business valuation, performed by a professional such as a business broker, will document and assign a specific value to intellectual property. This makes it easier for a potential buyer to accept the value. Valuations also take into account any unique equipment or assets when determining how much a particular business is worth. A buyer may be willing to pay more for a business if it owns equipment that allows the company to operate more efficiently. A certified valuation will make sure details like this are not overlooked, and will place a specific value on them.

Certified valuations are also more likely to carry credibility, and therefore be more readily accepted by both buyers and sellers. This credibility can also come in handy if there are any legal disputes involving the business. For example, if partners in a firm want to dissolve their partnership, but disagree about the value of the business, the judge may rely on the valuation to resolve the dispute. This may also come up in a divorce, if spouses need to decide on an equitable division of assets. There does not have to be a legal battle for a business valuation to prove its usefulness. Even if joint owners are seeking an amenable separation, such as a buyout, a certified valuation can help to determine a fair asking price.

There are a few valuation methods used when determining what a business is worth. The asset method calculates a company’s equity by calculating the difference between a firm’s assets and liabilities. The income-based valuation method calculates the value of a company based on its current and projected, future cash flow. The market approach takes into consideration recent sales of other businesses within the same industry. Many business valuations utilize all of these approaches at once, as well as unique aspects of a particular business when determining its value.

A business valuation is an important tool for someone selling a business, but it can also be useful if you are looking to hold on to your company, or sell later on. Valuations can expose areas of the business that are in need of improvement. The results can be eye opening and can present opportunities to increase the value of your company. You might find that your business needs to increase its cash flow, or grow its customer base. You may discover that you can add value to your business be renegotiating vendor contracts, shedding debt, or organizing your financials. Finding out what is adding value to your company and what is dragging it down can help you sell it for more money, but it can also help you run a more profitable business while you are waiting to sell.

If you are preparing to sell a business in Lee, Collier, or Sarasota counties, make sure you know the true value of it before moving forward. Obtaining a certified business valuation should be your first step, because it will give you an accurate estimate of how much you can profit from selling the company. Corporate Investment Business Brokers (CIBB) offers a free, no-obligation business valuation and consultation to help you make your decision to sell easier. Our Fort Myers based brokerage has experience valuing businesses of all sizes, from every industry, and will account for every unique detail of your business when determining what it is worth. Contact us to learn more.

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